The Abundance faction doesn't understand Chinese economic development

Source: Wikimedia Commons. Used under a Creative Commons license.

On a recent episode of the Bad Faith podcast, Briahna Gray hosted a particularly good discussion of Abundance, the new book by Ezra Klein and Derek Thompson I wrote about at length back in March. All of the panelists — Sandeep Vaheesan, Aaron Rugenburg, and Isabella Weber — have recently reviewed the book, and each has made a distinctive critical contribution to Abundance discourse that draws on their own specific expertise.

Something that particularly struck me was Weber’s discussion of China’s success building high speed rail¹ and related account of what the Abundo-crats are getting so badly wrong about it:

They have this reading of China being able to build quickly because it’s authoritarian. Because you don’t have to debate with judges, because you don’t have strict zoning laws. So basically it’s the absence of regulation and the centralization of political power that makes it possible for China to build quickly. Now, I’m not saying that China doesn’t have some of these features. But picking out these features and saying [they are] what enables China to build fast is almost absurd if you reflect on it for a minute.

Unlike Klein, Thompson, and the various other neoliberal wonks who populate the astroturfed Abundance faction, Weber has actually studied and spent time thinking about the Chinese development model.² And her intervention here is interesting in and of itself, because any casual observer — whether Abundance-pilled or not — might easily assume the explanation for China’s success in building high speed rail comes down to a simple story of heavy-handed state behaviour unburdened by the regulatory constraints that exist in a liberal democracy.

China certainly isn’t a liberal democratic society, but as Weber explains that isn’t the main reason it’s succeeded here where wealthy US states like California have failed. For one thing, “there are many countries in the world that have authoritarian governments and loose environmental and building regulations. None of them has managed to build high-speed rail at breakneck speed.” More importantly, the closest analogue to China’s model of economic development in US history can actually be found in one of the key policy levers embraced by the American state during the New Deal era — i.e. the establishment of public enterprises whose existence compels market actors to compete and, consequently, engage in more socially-minded behaviour.

“At the core of this is a philosophy where the state is using markets as a tool…The question at every stop along the way is: how can you unleash market forces, channel them, control them, in order to pursue the goals that you have set for the state’s development? Of course it’s not the democratic version of FDR, but the philosophy of adding public competition, of using market forces in a big state-building project, is actually rather similar.”

Rail, of course, is the kind of infrastructure that requires a degree of centralized planning and coordination by design (it’s among the best examples, in fact, of a natural monopoly whose functioning is invariably made worse by market competition). But, in the Chinese example, there’s a whole lot more going on than a simplistic story of heavy-handed statism. Here’s Weber again in her Abundance review:

In fact, a quick search on the internet is enough to find a detailed study by the World Bank on how China managed to build its high-speed rail so quickly and efficiently. Among the key factors are: a 15-year plan that lays out long-term goals and was followed up with five-year plans to specify construction projects and revise goals based on past progress (these have all been upward revisions); special-purpose construction and management companies that are joint ventures between central and provincial governments; coordination among rail manufacturers, research institutions, and engineering centers; managers with clear responsibility and significant performance-based compensation that incentivizes them to stay for whole projects; a high degree of standardization in design and procedures; and a steady stream of projects to enable the creation of a “capable, competitive supply industry.”

If one tried to translate the Chinese experience into the American institutional context, one arrives at something closer to the “multi-solving, whole of government approach to planning and coordination” recommended for solar development in a recent study from the Roosevelt Institute and the Climate and Community Institute. It argues that what is needed is “multi-scalar land-use and site planning”; “coordinating between federal, state, Tribal, and local governments”; and the creation of “public and nonprofit solar deployment companies.”

Elsewhere, as in the electric vehicle sector, Weber further points out that the Chinese state — like the American one — has subsidized EV companies but has done so in a way that both encourages competition and has been carried out in conjunction with a suite of muscular regulatory policies. (The American model, in contrast, has given Tesla a quasi-monopoly despite the fact it produces vastly inferior cars.)

In any case, the example of high speed rail is yet another instance of the reductive Abundance narrative quickly falling apart upon closer inspection. At the end of the day, Abundance is a middlebrow airport book that’s been elevated more because it’s ideas are useful to the corporatist side of an intra-liberal factional fight than because they are intellectually rich or analytically sound.

But in thinking about how its proponents represent China, I wonder if there isn’t something else going on as well. In a conversation I recently had with the British writer Grace Blakely (I’m hoping to share it on here soon, so stay tuned) I made the somewhat flippant-sounding point that what the current right wing of liberalism — encompassing things like the Abundance faction, parts of tech, and so on — ultimately wants is something like the Communist Party of China.

I don’t mean that literally of course, or in some conspiratorial sense. But I do think there’s an influential segment of liberalism’s current braintrust that is 1) more or less completely unshakeable in its attachment to neoliberal economics and congenitally averse to the activist state-ism of something like the New Deal; 2) convinced that the cause of economic and social stagnation must necessarily be the continued existence of regulations and other things that constrain and limit the behaviour of market actors; 3) only able to respond to political defeats and failures by becoming more conservative and dogmatic about the market.

When you add these things together, what you get is a constellation of people who remain culturally liberal but increasingly have little patience for certain tenets of liberal democracy itself because — even after decades of neoliberalism — they are still seen to place too many constraints on the unfettered functioning of markets. Whether they’re willing to admit it or not, I think what many of these people fundamentally crave is an institutional apparatus that can operate over and above the likes of courts, environmental regulations, and zoning rules passed by elected local governments — not to carry out the kind of activist state-ism that once defined the New Deal, but instead to take a battering ram to whatever fragments of it still remain.

As Weber so usefully shows us, the Abundo-crats are simply wrong about how the Chinese state has been able to build so much high speed rail. But in the reductive narrative they offer, I think we can also discern something like an inadvertent confession as well.

1. China operates the world's most extensive high-speed rail (HSR) network, spanning approximately 48,000 kilometers — a staggering distance that now accounts for more than two-thirds of global high-speed rail.

2. See How China Escaped Shock Therapy: The Market Reform Debate (2021)